The Hunt for the Next 10 Bagger

[Brick]

Brick’s Guidelines to Trading

On December 31, 2009, I shared my brief story with you here: http://investorshub.advfn.com/boards/read_msg.aspx?message_id=45022191 . As of now, my story continues. I don’t have much to add to how I got here, but my success is growing as reflected in my brokerage account.

So, in order to help others, I’ve decided to jot down some guidelines that I live by when trading penny stocks, and in life in general. These may not be the most correct, or may not be considered standard practice, but these have worked for me. These are not in any particular order (except for Number 1), as my mind is just racing to get them all down:

1. My most important guideline: Never look back at a stock after you sell. Never look at what you “could have made” if you would have kept a stock to sell at a higher level. If you do, you may create a couple of things. You may chase a stock to get back in, and you may decide to hold the next stock longer than you originally planned only to be left holding the bag for a while. For every stock that I “should have held longer”, I can show you a stock that decreased in value when the PPS was expected to increase exponentially.
2. Related to Number 1 above, always have an exit strategy before you buy a stock. This is not to say that a strategy cannot change, which is a fine line to “looking back”. But, for the most part, set your sell(s) immediately after buying a stock. A case where your strategy may change: great news comes out during a stock’s run, resistance is broken, etc. As a side note to setting your sell, the market makers cannot use your shares to short a stock, because your shares are dedicated to sell.
3. If you have purchased a large block, break up your sells over a couple/few steps along the asking price. If your large block is stalling a run, the market may get discouraged and the PPS may retract.
4. Number 3 above helps you to ride “free shares”.
5. Always be positive when posting. Positive emits positive. A stock price going up is positive. You get the idea. Keep in mind that if you post a negative thought about a particular stock, your buddy who was with you previously in another stock may be in this stock, bad feelings emerge, and the cross-talk begins. We are in this to make money. Nothing is gained by creating negative feelings. An example is a whacker during a run: most of the time, the stock rebounds and continues upward; look at the more positive side and note that someone was fortunate to get cheaper shares, hence, stronger hands now control the stock.
6. Whackers are an unfortunate part of trading. Don’t participate whereby a snowball effect is created. If the stock never rebounds, no one wins.
7. Always practice good trading: buy and sell on the ask, or asking price. You make your shares available to the next buyer, you make more money, and the PPS goes up. Everybody wins. If you sell out your shares to the bid price, or market price, the price may plunge, and the PPS goes down. What comes around goes around, so always buy and sell at the asking price.
8. Be careful buying a rumor. Where did the rumor come from? When is the rumor going to take place? Can you substantiate a rumor? If a person in, say, the top 25 posters on IHub posts about a rumor, I would be more likely to believe it than from a poster that has a grand total of 3 posts on IHub. You get the idea. But, a rumor is still a rumor. Treat it as such.
9. There are no guarantees when buying or selling any stock. If there were, we would all be rich and the stock market would not exist as we know it.
10. All stock buys are not quick flips. Quite often, I hold stocks overnight, for days or weeks at a time.
11. Please don’t ask me if I am still in a stock. Since I do not want to create any type of selloff if I state that I’m out of a stock, I will usually not respond to inquiries. An example, I’m in RTGV, but I do not post about it every day.
12. Typically, reverse mergers are good, reverse splits are bad.
13. Do not marry a stock. Just trade it, and several others, too.
14. Never buy a stock with money that will take food from your table. You will lose. And, it breaks the rule, “Never say never”.
15. Do not put all of your eggs in one basket. One stumble and your eggs become soup. Always spread your money around in several securities.
16. Penny stocks have different rules to trading than big board stocks. If you have only traded big board stocks before now, throw everything out of the window and start your education over before investing in penny stocks. Also, no one cares what the analyst on your favorite business channel says.
17. Due Diligence (DD) is imperative. Period.
18. Profit is profit, whether it is $20 or $20,000. Be happy and move on.
19. Don’t get stuck on one stock-specific board. You end up reading and posting the same things this week as last week. No one learns anything.
20. Read absolutely everything you can. Your education never stops.
21. All pinkies suck to a certain extent, or they would be on a big board. So, don’t try to convince me that a stock is a POS.
22. I don’t care if the DOW fell today. I don’t play the DOW. Pinksheets and OTCBB stocks don’t share all the same rules and trading habits, so most problems on the DOW don’t apply. If they did, then I would just trade the DOW.
23. Volume precedes price. Get the volume, and then the price has a chance of going up.
24. I am not the most intelligent and most experienced person here. The faster I learn this, the more intelligent and more experienced I become.
25. Teach others what you know. Your return will increase ten-fold.
26. Honesty is the best practice. If you can’t be honest, then don’t say anything at all.
27. My integrity is everything, first for me. Then, to you, it comes natural.

I’m sure I could share some more, but these are the forefront of my daily thoughts. I hope this helps at least one person.

Brick



This post is in my opinion.